Last week the company managed to break even for the first time since it was acquired in January 2009 by Alexander Lebedev and his son, Evgeny who used a free newspaper model. It was only for that one week, but the very fact that the trend – showing income rising as costs fall – is up at all is remarkable at a time when newsprint publishers in Britain are suffering record losses.

Now the paper is preparing to increase its print run – possibly close to 750,000 a day from 600,000 – and is on course to turn a profit by 2012. It is reckoned that £20m has been removed from the company's cost base with both jobs and distribution costs cut.

It costs about £1.1m a week to produce the Standard and it is now earning just about £1.1m from advertising to offset those costs. Advertising revenue is up year on year, with display ads showing a marked rise. "There is a way to go yet," says the editor, Geordie Greig. "But we know we are on course because we are ahead of our best projections."

I must declare an interest because I write a weekly media column for the Standard. But the latest graphs from last October really do tell a positive story.

Accounts for the company, Evening Standard Ltd, due to be filed today at Companies House, reveal that in the nine months up to October 2009 the paper lost £18m and was projected to lose about £30m over the year once exceptional items were included.

It also emerges that the Lebedevs paid £6.7m to acquire the title, not the oft-quoted nominal £1, and that they kept the paper afloat by providing a loan. DMGT, which retained a 24.9% holding in the Standard, also loaned money.

The accounts conclude on 4 October last year. Eight days later the Standard became a free title, and that proved to be the beginning of a commercial transformation.

By going free the paper immediately sacrificed annual circulation revenue of £12m. Given that it was already trading at a loss, the risk was obvious. But, as Greig has said, it was "a decision born of necessity".

The company printed more than 600,000 copies of the paper, sold only 140,000, and gave the rest away at key points in London. The aim was to increase readership volume in the hope of selling that larger audience to advertisers.

Even so, they needed to attract sufficient ad revenue not only to make up for the loss in sales income but also to cover operating costs. Many rival publishers thought this to be an impossible dream.

One major advantage was the restoration of the Standard's monopoly in London with the closure of News International's free title, the London Paper, in September 2009 plus the closure in November of DMGT's London Lite. Advertisers now have a single port of call for London-wide freesheets.

The free model also meant that the Standard eliminated an expensive distribution process across London and the south of England.

About 8,000 outlets were reduced to just 300 distribution points specially selected for the volume of traffic, such as the main railway and tube stations, reducing van and seller costs. The paper was also reduced to two editions, available to commuters from about 4pm each weekday. This angered many of the former core readership, who found it difficult to get a copy. Some retailers, desperate to retain customers, then agreed to pay for the right to sell copies.

But the financial logic of free means that it makes more economic sense to increase the number of copies available at key points rather than satisfy people in the suburbs.

More than one in three people working at Canary Wharf now picks up a Standard every night and those who work late are frustrated by the fact the papers disappear by 7pm, often earlier. At Oxford Circus tube station, where 1,600 copies were sold a night, 20,000 copies are taken by commuters. Similarly, 1,000 copies were sold outside Holborn tube station – now 14,000 are given away.

The National Readership Survey figures reported that in the six months to March 2010, the paper had an estimated daily audience of 1,394,000, up by 133% on the year before. But advertisers seek more than quantity. They want affluent consumers.

Greig's message has always included the need to maintain the Standard as a "quality paper providing serious journalism". Two weeks ago he warned that the "sunlit uplands of profit" are still "a long climb" away "and the dusty days of summer are ahead". But the figures, if they are maintained, suggest that the incline is now much gentler.